Billionaire Leon Cooperman advised investors on Wednesday to stay away from bonds as they are in a bubble.
“My world is cash and stocks. I think bonds are the bubble, not stocks,” Cooperman told CNBC’s “Halftime Report.” He also noted investors should buy stocks they see as “fundamentally cheap” after a recent decline in equities.
Cooperman’s comments come after the benchmark 10-year note yield rose to 3.261 percent last week, its highest level since 2011. The sharp rise in rates spooked investors across the globe, with world equities falling sharply last week.
The Federal Reserve dropped its overnight interest rates to zero in the aftermath of the financial crisis as it tried to jumpstart the U.S. economy. This pushed yields down to historical lows, thus sending bond prices higher and to levels that some investors like Cooperman say reached bubble proportions. Now the Fed is reversing these policies by rising interest rates and trimming its balance sheet. The central bank has already hiked rates three times this year and is forecast to raise them once more before year-end.
Investors were worried that a rise in rates would lead to higher borrowing costs and thus slow down the global economy.
Cooperman, the CEO of Omega Advisors, said the market can handle higher interest rates, however, as there are no signs of a recession looming.
“The economy, if anything, is too strong,” Cooperman said. “The economy is on fire … The conditions that normally lead to a big decline just aren’t present.”
Cooperman’s comments come as U.S. stocks try to recover from a 4.1 percent decline last week amid worries about higher rates, tech valuations and fears of a global economic slowdown.WOMENS Kanna Beige Wedges Strong valuelady Fendi Sughero Sandals Call firstAdidas By Raf Simons Sneakers - Men Adidas By Raf Simons Sneakers online on YOOX United Kingdom - 11269605RD , Diadora Heritage Exodus 5/8 Sw - Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11105719GOMISS Tory Burch Beige Wedge Sandals Known for its beautiful qualityJUNCAL AGUIRRE 1365 WEDGE-HEEL SANDALS FOR WOMENwomens Nicholas Kirkwood Gray Platforms Consumers firstMango DANIELA - Classic heels Colour: pink , man/woman Jessica Simpson Zander Clogs & Mules Caramel, gentleAdidas Steve Madden BRYANNE - Slip-ons - nude/multicolor , Diemme Boots - Men Diemme Boots online on YOOX United Kingdom - 11500606CVTsd12 Boots - Men Tsd12 Boots online on YOOX United Kingdom - 11504481FISalewa MS MTN TRAINER GTX - Walking shoes - night black/kamille , Silvano Sassetti Loafers - Men Silvano Sassetti Loafers online on YOOX United Kingdom - 11457856QO , men's/women's Joules Flip-Flop Sandals Won highly appreciated and widely trusted at home and abroad , Nike Performance ODYSSEY REACT - Neutral running shoes - thunder grey/blue hero/gunsmoke/black/vast grey , Versace Sandals - Women Versace Sandals online on YOOX United Kingdom - 11057415IR , Lilimill Court - Women Lilimill Courts online on YOOX United Kingdom - 11522304EJGioseppo Loafers - Women Gioseppo Loafers online on YOOX United Kingdom - 11575470TA , Pantanetti Ankle Boot - Women Pantanetti Ankle Boots online on YOOX United Kingdom - 11525414DV , Prada Sport Sandals - Women Prada Sport Sandals online on YOOX United Kingdom - 44895025UC , Giampaolo Viozzi Court - Women Giampaolo Viozzi Courts online on YOOX United Kingdom - 11550038WHStrategia Ankle Boot - Women Strategia Ankle Boots online on YOOX United Kingdom - 11531519HW , Sandro Accept Leather Platform Sneakers Sneakers , n57u0teG La Sportiva TX4 Mid GTX , 3mcy416z Keds Pro-Keds Royal Plus Suede , hkrwLUTv woman Moschino Sneakers New design , Louis, elaborate Josef Seibel Tonga 23 , Strong heat and wear resistance Propet Travelfit Strap , LADY Céline Black Espadrille Wedges Every article described is available ,
But Cooperman thinks stocks will bounce back from this decline as they are fairly valued. He also noted the market can handle higher interest rates.
“My central view is the market will be higher than it is today at year-end,” he said. “We’re in a zone of fair value and it’s going to take a recession or a change in the Fed’s posture” to get us out of that.